From December 3, 2018, new regulation takes place in EU, trying to end pricing discrimination in the internal market. EU is fighting unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of the establishment with regulation (EU) 2018/302 of the European Parliament.
Good news for consumers, bad news for online stores?
This regulation is certainly good for an average European consumer, unlike in the US, shipping prices in EU usually vary a lot, most of the online stores do not even ship to other EU countries, the whole process of shipping and warranties is complicated by numerous other regulations. E-commerce and evolving technologies made it easier for shop owners to redirect customers to “special” section of the online store based on their IP address or browser language, offering the same product with different pricing and conditions. The new regulation is trying to end the geo-blocking, but exceptions apply.
New responsibilities for shop owners
E-shop owners have new responsibilities now, by December 3, 2018, they need to make sure their online point of sale does not discriminate EU customers from other member states. This may be an expensive process, in some cases with the engagement of lawyers and developers.
Start with researching the regulation (EU) 2018/302, review your existing Terms & Conditions, review your payment processing policies and requirements, review your distribution and delivery processes and policies.
Every time the European Parliament introduces new regulation, it is usually considered a painful implementation process for affected parties, but in the long run, because you don’t have a choice and if you want to “tap” the European market, you need to comply. EU is lately trying to protect consumers in many different ways, protecting their privacy, regulating banks, telecommunication operators, e-commerce and many other industries, more changes and regulations are coming, we will keep you informed and help you comply with your website or an online store.
New regulations can be also a good opportunity to simplify and perfect your sales processes, for some even opportunity to make more sales and make money. Faster you comply, some customers may prefer your services over conservative online stores that will be scared by the process and not ship across borders at all.
Only time will show, whether consumers will profit from this regulation. Most of the big retail chains already implemented the 2018/302 regulation, selling it to their customers as: “Good news, we are shipping to your country now”. The big question is what about small stores that were compensating out of state sales by higher prices, now they can’t – are they going to continue offering services outside their domicile? They don’t have to. Is this better for the consumer? remains the question.
How to comply
In your Terms and conditions, amend or remove any measures to block customer’s access to your online store based on nationality, domicile, residence. Stop redirecting customers to specific customized areas of your website based on geo-location unless you gain specific consent. If you need to redirect anyway, state reasoned explanation.
Differential treatment in payments is prohibited, if your customer is able to make payments through electronic transaction by credit transfer, credit card or debit card within the same brand or category, authentication requirements are met and payments are in the currency that trader accepts. Some exceptions apply, for example, you are under no obligation to accept the payment if this requires entering into a newly modified contract with the payment initiation service provider, so check with your lawyer if you are in need of exception.
Distribution and delivery arrangements and policies need to be amended in a way that they do not discriminate between EU nationals. You don’t have to set up delivery points in every country in EU.
For example, if German consumer buys a product from online stored based in Ireland and German consumer provides Irish delivery address during the checkout process, this German consumer must be treated equally as Irish consumer including delivery prices. On the other hand, if the German consumer is not able to provide a local Irish address, reasonable extra shipping charges may apply.
Do you have more questions?
We recommend reading the official regulation document (EU) 2018/302, if you have more questions regarding the interpretation of the regulation, you need to ask your lawyer. If you are just entering European markets, contact us for technical options on how to implement your online store solutions in EU.